(BEDFORD) - Lawrence County Circuit Court Judge Andrea McCord upheld Attorney General Greg Zoeller's motion for a restraining order to freeze Kathy Kirk's assets - including her home, two vehicles and any bank accounts or pension or retirement accounts.

Zoeller filed a lawsuit against Kathy Kirk, former Mitchell School Corporation school treasurer, demanding more than $110,000 as repayment for public funds that the ex-treasurer allegedly misappropriated from the Mitchell Community Schools and used for personal expenses.

A State Board of Accounts audit indicated that Kathy Kirk charged personal expenses to a Mitchell Community Schools business card, including cable service, jewelry, restaurant meals, hotel stays, insurance, clothing and fuel expenses.

In a special audit of the Mitchell Community School system's finances covering the time frame from December 2006 to June 2011, State Board of Accounts examiners found five types of misappropriation by Kirk:

Using school funds to pay personal or non-school expenses, totaling $76,926.35. The SBoA audit report found that Kirk had used one of the school's credit cards to charge purchases for restaurants, fuel, catalog purchases, clocks, jewelry, insurance, cable service, PayPal, men's and women's clothing, household appliances, groceries and greeting cards.

The audit also found she paid personal utility bills for AT&T, Verizon and Duke Energy as well as her IRS tax bills, paid invoices to companies that did no business with Mitchell Schools, and wrote checks for payments to Ball State University - all using school funds.

Receiving reimbursement for travel not related to school business totaling $1,469.88.

The audit report found Kirk charged the school for duplicate payments, false mileage claims, and hotel stays at locations where there were no meetings or school business.
Diverting two school payroll checks for a former school employee into her personal bank account, totaling $3,156.48.

Failing to deposit three collections the school received into school bank accounts, totaling $1,129.55. Incurring penalties, interest and late charges from vendors totaling $4,007.33, which the school corporation had to pay.

The direct loss to the Mitchell School Corporation was $86,689.59 for which repayment is sought from Kirk.

In investigating the misappropriation, the State Board of Accounts incurred another $24,200 in audit costs, an expense that is also sought from Kirk.

When the State Board of Accounts issues a certified audit report, it authorizes the Attorney General's Office to attempt to recover the money to reimburse the public treasury for the amount misappropriated.

In the State's underlying complaint to recover public funds, Zoeller asks the court to enter a civil judgment against Kirk. If it is granted, the Attorney General then could pursue the monetary judgment through collections, and could seek to attach liens on property, garnish wages or take any other actions a creditor could take against a debtor to collect on a debt.

Also named as a defendant in the lawsuit is Fidelity Deposit Company of Maryland, with an address in Schaumburg, Ill., which wrote a series of five public official bonds for $200,000 each as an insurance policy against theft, under which Kirk was covered.
By naming the bonding company in the lawsuit, the State seeks to redeem the bonds to reimburse the school corporation for the amount owed. Any portion not covered by the bonds would be Kirk's personal responsibility.

Whether a public official is civilly responsible for repaying misappropriated funds is a separate issue from whether they are criminally responsible for a loss.

In April, Lawrence County Prosecutor Michelle Woodward criminally charged Kirk with corrupt business influence and forgery, both Class C felonies, and theft, a Class D felony, and she has a jury trial scheduled for September 4th in Lawrence Circuit Court on those counts.

Through his role as lawyer for the State Board of Accounts seeking to reimburse the public treasury, the Attorney General has legal jurisdiction in such cases to file civil lawsuits.

This is the 44th lawsuit since January 2009 where Attorney General Zoeller's office has sought temporary restraining orders following audits where the State Board of Accounts found misappropriation by public officials.

In 2009, the Legislature at Zoeller's urging passed House Enrolled Act 1514-2009 that allowed the Attorney General's Office to intervene earlier if misappropriation is suspected in government offices.

The new law also increased the amount of surety bond that officials are required to carry, to a minimum $30,000. So that one individual is not left with the sole ability to charge expenses to taxpayers without some oversight or accountability, Zoeller also has recommended that government offices require dual approvals from at least two employees to authorize expenditures of public funds.